U.S. v. Ayesh

• Decision Date: 28 January 2011
• Docket Number: No. 1:10cr388.,1:10cr388.
• Citation: 762 F.Supp.2d 832
• Court: U.S. District Court — Eastern District of Virginia
• Parties: UNITED STATES of Americav.Osama Esam Saleem AYESH, Defendant.

762 F.Supp.2d 832

UNITED STATES of America

v.Osama Esam Saleem AYESH, Defendant.

No. 1:10cr388.

United States District Court, E.D. Virginia,Alexandria Division.

Jan. 28, 2011.

David H. Laufman, Thomas H. McQuillan, United States Attorney's Office, Alexandria, VA, for Plaintiff.Aamra S. Ahmad, Office of the Federal Public Defender, Alexandria, VA, for Defendant.

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

Defendant, Osama Esam Saleem Ayesh, is charged in a two count indictment with abusing his position at the United States Embassy in Baghdad, Iraq to steal and to convert to his own use $243,615 belonging to the United States, in violation of 18 U.S.C. §§ 641 and 208(a). He seeks threshold dismissal of the indictment on jurisdictional grounds, arguing that this prosecution is an impermissible exercise of extraterritorial jurisdiction inasmuch as all the charged conduct occurred outside the United States and neither § 641 nor § 208 can be applied extraterritorially.

This matter, which has a somewhat involved history, has been fully briefed and argued and is now ripe for resolution.¹

I.

During the period of time relevant to the indictment, 2008–2010, defendant, a primary resident of Jordan, was employed by the Department of State and assigned to the United States Embassy in Baghdad, Iraq (“USEB”) as a shipping and customs supervisor when he allegedly abused his USEB position to convert $243,416 from the United States. As a USEB shipping and customs supervisor, defendant was responsible for facilitating shipments of personal property belonging to USEB personnel into and out of Iraq, including ensuring that these items cleared customs. The process of clearing Iraqi customs was typically coordinated by an experienced local vendor with whom USEB contracted, and defendant's role was to oversee and to assist the vendor on behalf of USEB. Each vendor with whom USEB contracted for services generally operated pursuant to a Blanket Purchase Agreement (“BPA”) with USEB. To receive payment for services, each vendor was required to submit a Wire Transfer Payment Instruction Form (“WTPIF”) specifying the vendor's bank account. When payment was required, money was wired from a U.S. government bank account to the account specified by the vendor in the WTPIF.

Two BPAs are relevant to the charges against defendant. Both BPAs involve the same local vendor, Sukar Al–Zubaidi Company (“SZC”), which USEB engaged for “Delivery Services and Customs Clearance.” The first BPA was identified as SIZ100–08–A–0628 and dated September 11, 2008. After several months of operating under this BPA, the $100,000 ceiling established in the BPA was reached, and thus, on May 12, 2009, USEB entered into a second BPA with SZC, identified as SIZ100–09–A–0496. On each of these BPAs, defendant was identified as one of two “BPA callers,” meaning that defendant was authorized to contact SZC and to arrange for services on behalf of USEB.

The indictment alleges that defendant used his position as an intermediary between USEB and SZC to divert funds intended for SZC to a Jordanian bank account controlled by his wife. He did so, according to the government, by setting up a fictitious email address, “co. alzubaidi@ yahoo. com,” which defendant led USEB officials to believe belonged to SZC. But the government alleges that in fact, defendant controlled this email account and was responsible for all “correspondence” between his Department of State email address and his fictitious SZC email address. Using this fake email address, defendant allegedly submitted a WTPIF supposedly drafted by SZC in which defendant identified SZC's bank account as an account that, in reality, was controlled by defendant's wife. As a result, wire transfers were made from U.S. government bank accounts—not to SZC—but to an account allegedly controlled by and accessible to defendant. USEB officials eventually discovered discrepancies related to the BPAs, and an investigation revealed numerous incriminating emails sent by defendant.

Once defendant's scheme was discovered, agents from the FBI and the Department of State Office of the Inspector General began a comprehensive, but covert investigation. Following the issuance of an arrest warrant for defendant, USEB officials lured defendant to the United States by telling him that he was being selected for participation in a training program to be conducted in the United States. When defendant arrived at Dulles International Airport, he was promptly arrested, and soon thereafter indicted.

The three count indictment may be briefly summarized. Count I charges that from approximately November 2008 to April 2009, defendant “did knowingly embezzle, steal, purloin, and convert to his use $116,105 in U.S. Government electronic funds” intended for the payment of services under BPA SIZ100–08–A–0628 but instead transferred to a Jordanian bank account controlled by defendant, in violation of 18 U.S.C. § 641. Count II of the indictment charges that from approximately May 2009 to June 2010, defendant “did knowingly embezzle, steal, purloin, and convert to his use a record, voucher, money, and thing of value of the United States ... in that defendant fraudulently caused $121,131 in U.S. Government electronic funds” intended for the payment of services under BPA SIZ100–09–A–0496 to be transferred to a Jordanian bank account controlled by defendant, also in violation of 18 U.S.C. § 641. Finally, Count III of the indictment charges that in violation of 18 U.S.C. § 208(a), defendant, while employed by the Department of State, “participated ... personally and substantially” in the BPA contract process despite having a personal financial interest in the bank account associated with the given contracts—a conflict of interest. See Indictment, Counts I–III. At arraignment, defendant pled not guilty and requested a trial by jury.

II.

The government argues that the exercise of jurisdiction in this case is appropriate for two reasons. First, the government asserts that there is no need to reach the question of extraterritorial jurisdiction because defendant's conduct fell within the territorial jurisdiction of the United States, given that the wire transfers in question involved banks or bank accounts based in the United States. Second, the government argues that even assuming defendant's conduct does not satisfy territorial jurisdiction, the statutes themselves must be construed to allow for the exercise of extraterritorial jurisdiction.

A. Territorial Jurisdiction

Analysis of the jurisdictional issue raised by defendant's motion appropriate begins with two well-settled presumptions concerning the jurisdiction of federal criminal statutes. First, statutes are presumed to apply to offenses committed anywhere in the territorial jurisdiction of the United States. Second, statutes are presumed not to apply extraterritorially, absent the “clearly expressed” intention of Congress to extend jurisdiction beyond our borders. United States v. Mohammad–Omar, 323 Fed.Appx. 259, 261 (4th Cir.2009) (citing EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991)); see also Reyes–Gaona v. N.C. Growers Ass'n, 250 F.3d 861, 864 (4th Cir.2001); 18 U.S.C. § 3231 (establishing the criminal jurisdiction of federal district courts). The statutes in issue, 18 U.S.C. §§ 641 and 208, clearly apply throughout the territory of the United States, but it is a more difficult question whether the statutes extend extraterritorially. Therefore, before addressing the extraterritoriality question, it is appropriate to consider whether defendant's conduct occurred within the territorial jurisdiction of the United States.

Generally, territorial jurisdiction is proper where “the offense, or part of the offense, occurred within the United States.” See United States v. Moncini, 882 F.2d 401, 402–04 (9th Cir.1989). In this regard, “[a]cts done outside a jurisdiction, but intended to produce and producing detrimental effects within it,” justify the exercise of territorial jurisdiction. See Strassheim v. Daily, 221 U.S. 280, 285, 31 S.Ct. 558, 55 L.Ed. 735 (1911). Yet, the Fourth Circuit has also noted that “[m]inimal contact with the United States should not automatically render conduct domestic.” In re French, 440 F.3d 145, 149 (4th Cir.2006).

While the general principles of territorial jurisdiction are well settled, the parties identify no cases—and none has been found—elucidating precisely what minimum level of contact with United States territory will trigger territorial jurisdiction for the statutes in issue. The leading case in the Fourth Circuit on territorial jurisdiction appears to be In re French, in which the Fourth Circuit applied these principles to determine whether an alleged fraudulent transfer in violation of the Bankruptcy Code was territorial or extraterritorial in nature. As an initial matter, the French opinion noted that the Fourth Circuit had never before defined “extraterritorial” for the purposes of jurisdiction. Id. at 149–50. The Fourth Circuit in French began its analysis with the premise that the analysis should “eschew rigid rules in favor of a more flexible inquiry,” and it concluded that the analysis should turn on “whether the participants, acts, targets, and effects involved in the transaction at issue are primarily foreign or primarily domestic.” Id. In those circumstances, the French court found the conduct in question was “domestic” because “the perpetrator and most of the victims of the fraudulent transfer [except one] have long been located in the United States,” meaning that “the effects of this transfer were (naturally) felt most strongly here, and not in the Bahamas.” Id. at 150. Additionally, the allegedly wrongful decision to transfer the property in question for “less than a reasonably equivalent value in exchange” was made in the United States, and that conduct fulfilled a material element under the...